What’s the difference between PLM, ERP, EAM and more?

And why is PLM the best of the available options.

It is an irony of technology that the solutions, systems and platforms that seek to drive business benefits often describe themselves and their focus in strikingly similar terms. The descriptions and sales demonstrations presented to new prospects by many solution providers seem all-encompassing. In fact, without deep-dives into the nuances of their messages, solutions and associated capabilities, they become nearly indistinguishable—akin to clones.

A little PLM 101 is needed to compare it with its alternatives. (Image: Bigstock.)

A little PLM 101 is needed to compare it with its alternatives. (Image: Bigstock.)

The main source of this confusion is that the enterprise-level solution providers edge closer to each other’s capabilities with each release. In their pursuit to be competitive, their offerings have become so feature and function-rich that many look alike. Even so, they constantly add new capabilities in support of their core competencies and focused domains—which are dearly loved by the users they enable and empower.

This article looks at two enterprise-level solutions that are often confused—Enterprise Resource Planning (ERP) and Product Lifecycle Management (PLM). They stand out as the two most prominent digital solutions for managing data at the enterprise level. Proponents of both have been touting the benefits of their solutions for a few decades while rarely addressing each other, let alone lining them up side by side.

While briefly discussing four other enterprise-level solutions: customer relationship management (CRM), enterprise asset management (EAM), building information management (BIM), and manufacturing execution systems (MES), I am mainly comparing ERP and PLM. Or what I call the “big two.”

I will share what users of both ERP and PLM have told CIMdata. The hope is that their observations will speak for themselves. I will also explain why PLM is better from the standpoint of defining and managing the complete lifecycle, product data and associated lifecycle processes.

PLM, ERP and how they started to overlap each other

At first glance, ERP and PLM may not seem that different — but they are. Their differences emerge when we look at their roots and core functions. ERP mainly grew out of the need to manage finances and manufacturing (i.e., the management of physical assets), while PLM primarily grew out of the need to manage product development (i.e., the definition and management of product-related intellectual assets).

Each of these solutions emerged in the 1980s from the digitization and computerization required to manage an enterprise’s ever-evolving data and process needs. Both product and organizational complexities continue to drive the adoption of these and many more digital technologies.

Over the ensuing decades, these solutions steadily evolved, growing in features and functions as they were implemented at ever higher levels of the enterprise. Each solution matured to enable key elements of Information Technology (IT), Engineering Technology (ET) and Operations Technology (OT).

Growth-driven solution providers of ERP and PLM inevitably began to see their peers as rivals as the boundaries between the front end of the product lifecycle and its production side blurred and overlapped. Both solution camps also support similar data constructs and processes (e.g., parts, BOMs as well as engineering change and release management). Soon, new features and functions began to mimic each other, giving rise to today’s confusion that surrounds digital realms at the top of every enterprise.

Back to the roots of enterprise solutions

Different enterprise-level solutions begin, sensibly enough, with different digital roots. It is the development directions taken that led to their similarities. Here is how many different enterprise tools had their start.

  • ERP came to life as toolsets designed to track and manage finances, inventories and generate BOMs for purchasing and production. An offshoot of MRP, or materials requirements planning (or “processing”), ERP steadily expanded digital record keeping into “running the business.” ERP began as a way to keep key managers aware of everything impacting the bottom line; forecasting trends and automating these functions have progressed steadily ever since. The primary focus of ERP is on the management of an organization’s physical products (i.e., a physical asset-centric approach).
  • PLM is built on the basic connectivity of transforming data and ideas into information within product development (i.e., an intellectual asset-centric approach), which then (literally) drove the tools and systems of production and service. As this connectivity expanded, the need for structures and repositories became apparent, giving birth to PLM’s support of digital threads and digital twins. These elements, among others, distinguish PLM from its predecessor, product data management (PDM).
  • CRM originated as a toolset for tracking customer contacts through various channels, including websites, mailings and telephone calls. It evolved with the advent of social media to manage all external customer interactions to grow a base of repeat customers with better assessments of their needs and faster responses. Some CRM solutions even have PLM solutions built on top of their platforms.
  • EAM evolved from computerized maintenance management systems (CMMs) into a lifecycle management approach for monitoring and supporting the well-being and performance of maintained assets from acquisition/commissioning to the end of their productive life (i.e., in-service asset-centric). While more narrowly focused, CMMs centralize, upgrade and automate maintenance management information. Today, many PLM and ERP solutions provide EAM support.
  • BIM emerged from the architecture, engineering and construction (AEC) branch of CAD, and focuses on building and maintaining infrastructures (e.g., buildings, rail and utility networks). In the private sector, BIM is universally used for large and small buildings. In the public sector, BIM addresses the design and management of data associated with complex projects and assets such as roads, bridges, utility plants and distribution networks, pipelines and dams for federal, state and local governments. Users also rely on BIM to manage complex relationships between owners/operators, contractors and project completion/hand-over. BIM can be thought of as a domain-specific PLM solution.
  • MES was developed to monitor and document real-time operations, turning raw materials into physical components and finished goods. MES tells decision-makers what is and is not happening in production, highlighting needed improvements and helping optimize production. MES is often used for intermediate data management between factory floor supervisory control and data acquisition (SCADA) systems and ERP.

As CRM, EAM, BIM and MES matured, solution providers added connectivity for frequently accessed third-party toolsets and platforms, starting with design and analysis basics, as well as simplified access to the Internet of Things (IoT). Along with the automation of everything and anything, toolsets (integrated or third-party) are now used for simulation and analysis along with computer-aided process planning and work instructions. Examples of these simulation, analysis and planning tools include metrology, testing, inspection; real-time video with augmented reality and virtual reality (AR/VR); data governance/configuration management, machine learning, predictive analytics, artificial intelligence (AI) and more.

To some degree, all are integrated with or are components of a Model-Based Enterprise (MBE) approach. Prompted by PLM’s success, many are developing rudimentary digital twins and digital threads, or are positioning themselves so that they enable and/or support these digital constructs.

What remains unchanged is the fundamental distinction between ERP and PLM users. ERP is the primary enterprise toolset for people with business or purchasing backgrounds focused on profitably “running” the business, emphasizing the management of the physical product. PLM is primarily used by engineers and others with technical backgrounds who develop and support the products, systems and assets that contribute to an enterprise’s competitiveness, emphasizing the virtual product.

Core functions and expansions of today’s enterprise solutions

With the incorporation of the additions and advances mentioned above, and thanks to its end-to-end bidirectional lifecycle connectivity, PLM has matured into an enterprise-spanning platform. The other five solutions, while providing value, lack PLM’s intellectual asset reach and robustness. Also, it is unlikely they will keep their (more limited) effectiveness as PLM solution providers invest in “immersive engineering” and shift their support of products and services into the support of an evolving digital “metaverse.”

PLM is rapidly being implemented across diverse industries—food and beverage, retailing, fashion, banking, insurance, packaging and distribution, media, transportation, pharmaceuticals, healthcare services and more. While many of these industries generate physical products, they are overshadowed by information gathering, simulation, analysis, compliance verification and feedback. Much of this cannot be handled by other enterprise platforms. Mostly, this is accomplished through modifications and add-ons rather than (usually troublesome) customizations.

ERP has also matured to span the enterprise and is now a platform to monitor, in near real-time, every action, change and decision that impacts the bottom line. It links finance, back-office functions, sales and purchasing and inventory management with sales, marketing, distribution, human resources, factory operations and suppliers. Even if they are not directly managing them, ERP systems facilitate E-commerce, security, privacy, risk management, remote work, energy consumption, environmental sustainability and various Industry 4.0 initiatives.

Interestingly, the terms “collaboration” and “communication,” ubiquitous in PLM, remain scarce in ERP self-descriptions. Presumably, because ERP remains true to its roots in tracking costs and quantities, leaving product development functions, related intellectual asset creation and management capabilities in the hands of others.

EAM has steadily evolved from preventive to predictive approaches for asset tracking and management. These can cover all phases of maintenance, including scheduling, planning, work sequencing/management, mobility, analytics, health and safety and even supply chains. While EAM is used in many manufacturing and service organizations, it is more often found in energy production and distribution, oil, gas, nuclear power, utilities, mining and chemical production. For asset-management businesses, EAM can serve as both PLM and ERP. As noted previously, PLM solutions are successfully eating away at this enterprise solution domain in many organizations.

CRM aggregates customer information to access current and prior contacts (sales and service), purchase history and updates and performance tracking. As with other enterprise solutions, CRM automates the sharing of customer interactions so business units and teams can work together smoothly. Leading CRM solution providers have begun integrating AI into their offerings. CRM has matured enough to be used as both PLM and ERP in companies intensely focused on sales and customer relations, such as dealerships.

BIM has also matured somewhat into both PLM and ERP for buildings, infrastructure and floorplans; monitoring on-the-job equipment; the transfer of work from job sites to factories and even the weather. BIM users can scan and find virtually anything using drones and innovative imaging technologies such as Lidar (light detection and ranging). As for connectivity and access, BIM users say it’s good now, but they never have enough of either to deal with local, county and state building codes and environmental regulations. In the public sector and civil engineering, BIM users monitor and manage projects as well as changes in specifications, budgets and completion dates.

MES has reached a level of maturity where it monitors and controls production inputs, personnel, machine uptime and downtime, support services and scheduling while tracking their effectiveness. The track-and-trace capabilities of MES create “as-built” forms of products and production systems include additive manufacturing (3D printing), material handling, robotics, automated assembly and new processes for advanced materials. This is particularly valued in regulated industries requiring process documentation, problem tracking, and implementing corrective actions. Many job shops and even some large machining companies use MES to “run the business,” not just manage production operations and outcomes.

How PLM and ERP remain different

The time has come to shift our focus from technology to people. ERP and PLM powerfully support and enable the information needs of their users, but the tasks and responsibilities, along with the required skillsets, differ significantly. The data and information underlying ERP and PLM constantly change, often abruptly and in unanticipated ways; both handle these changes well but accommodate them differently.

ERP’s dollars-and-cents focus demands skills in finance and accounting. Many of its users also have purchasing backgrounds. These users have ongoing needs for a narrow range of data and mostly repetitive information. These needs are logical given that ERP users focus on the here-and-now to track dollar-denominated costs, forecasting profits and projecting them into the near future.

PLM’s emphasis on modeling, analysis and communications demands in-depth skills for conceptualizing and developing viable new products, systems and assets—guiding them through production and into users’ hands, all while maintaining them. PLM users work with much more diverse information sources and types and have far greater needs for graphics than ERP users, whose tools and tasks are predominantly numbers-based.

Compared to ERP users, PLM users interact daily with a wide range of design tools, simulations, analysis systems, information types and formats. In contrast to ERP environments, PLM information and decisions are shared across the extended enterprise, augmented by continuous feedback. This has led to many PLM solutions being architected for integration and openness—realizing that they provide a data and process management platform that supports the easy integration of third-party and enterprise-specific applications configured and changed over time.

Tasked with keeping costs within budgets, ERP users primarily focus on the enterprise’s biggest cost drivers—purchasing, production and sales. Managing design and development, with its countless detailed component descriptions, work instructions and inspection criteria for every production phase, is much easier in PLM. So is accommodating the MBE with its Model-Based Design and Model-Based Systems Engineering elements that align with the organization’s overall digital aspirations.

Users leverage PLM’s collaboration and information access across large spans of the enterprise while fostering the digital transformation of the organization’s intellectual assets and the processes that create, manage and use them. Compared with ERP users, PLM users need far more detailed representations of intermediate stages, analyses and decisions as products evolve from ideation through engineering, production, sales and service.

Can innovative, competitive new products be generated in ERP? I must admit, I have never heard of them. Undoubtedly, some have. ERP’s top-down approach is essential for management control over as much of the enterprise as possible. This inherently makes it backward-looking with a focus on identifying and evaluating past results.

The PLM advantage is that its focus is on innovation, intellectual asset creation and management. This fundamentally forward-looking framework makes PLM non-hierarchical, collaborative, structured and effective.

Again, I have never heard of engineers innovating and collaborating using ERP. Why not? Because ERP tends to be a top-down approach to foster management “control.” PLM’s strength is that being inherently more collaborative and less hierarchical will always be preferred by engineering and product development. Fundamentally, ERP focuses on an organization’s physical assets, whereas PLM focuses on its intellectual assets. As a result, a company needs to digitally enable its business with the appropriate solutions for the task at hand and not try to utilize a solution that wasn’t designed for the purpose being addressed. Doing so should be deemed a non-starter for all.

Further reading

This article is the culmination of my latest series of PLM-focused articles developed for Engineering.com: